HIGHER RETAIL ENERGY PRICES IN SAUDI ARABIA AND THEIR AGGREGATE IMPACT ON WELFARE ACROSS GENERATIONS

摘要

Recycling additional oil income either through public investments or public current spending may trigger important intergenerational redistributive effect in Saudi Arabia. It is all the more relevant for policymakers to consider this intergenerational dimension of energy policy choices as Saudi Arabia has today more than 75 percent of the population under 40. Another policy implication of our results is to show that, in this context, the anticipations about future oil prices significantly influence the definition on current recycling policies. More precisely, focusing exclusively on higher public investments never appears to be an accurate policy idea in our model. Progressively raising public capital expenditures may well function as a desirable mechanism, however, if the future oil income in the Kingdom of Saudi Arabia happens to diminish over time, whether because of lower prices on world markets and/or lower domestic production mirroring lower world demand.